February 19, 2002 - 12,350 subscribers
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Some 401(k) Plans Converting to ESOPs to Take Advantage of Deductible Dividends on Company Stock
Excerpt: "To get the tax deduction under the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, employers must give participants the option to receive those dividends in cash. The deduction is available regardless of how many plan participants if any choose that option. Prior to EGTRRA, dividends paid on stock in an ESOP were deductible only if they actually were paid out in cash." (PLANSPONSOR.com; free registration required)
Unique Combination of Capital Market Conditions in 2000 and 2001 Has Major Impact on Pension Plans
Excerpt: "Capital market results for 2001 had a major impact on pension plan financial performance. The combined result of unfavorable investment portfolio returns and liability increases reduced typical plan funded levels by 10% to 15%, following a similar decline for 2000, according to a report from Towers Perrin ..." (Business Wire via International Foundation of Employee Benefit Plans)
Employee of Affiliated Company Not Entitled to Retirement Plan Benefits
Lopriore v. Raleigh Cardiovascular and Thoracic, Inc. (4th Cir. 2002). Excerpt: "The court found that Mr. Lopriore was not entitled to benefits because RCV Tech never executed an adoption agreement making its employees eligible. In other words, Mr. Lopriore was not in the class of eligible employees, because he was not an 'employee' of Raleigh C & T. The status of the two companies as an affiliated service group for tax purposes did not affect the plan's eligibility provisions." (EBIA Weekly)
American Benefits Council Publishes Summary of Legislation Affecting Retirement Plan Investments (PDF)
7 pages, arranged by issue (caps on employer stock investments, disclosure regarding blackout periods, etc.). (American Benefits Council)
Opinion: Don't 'Enron' Social Security?
Excerpt: "The Democrats are saying 'don't 'Enron' Social Security' in yet another attack on President Bush's plans to let workers invest part of their taxes in personal retirement accounts ... In truth, however, it is today's unreformed Social Security program that most resembles Enron." (Cato Institute)
Written Statement of Elaine L. Chao, Secretary of Labor, Before House Committee on February 7
Excerpt: "This Administration is very concerned about the impact of the Enron bankruptcy on its workers and retirees. On November 16, 2001, the Department of Labor began an investigation to determine whether violations of ERISA may have taken place. The Department also is assisting affected Enron workers, informing them of their rights and options with respect to health and retirement benefits." (U.S. House of Representatives, Committee on Education and the Workforce)
Witness List and Written Statements: the Enron Collapse and its Implications for Retirement Security
From the February 7, 2002 hearing. Includes statements of Thomas O. Padgett, Plan Participant, EOTT (Enron Subsidiary); Cindy K. Olson, Executive Vice President Human Resources, Enron Corporation; Mikie Rath, Benefits Manager, Enron Corporation; Scott Peterson, Hewitt Associates; Teresa Ghilarducci, Associate Professor, University of Notre Dame. (U.S. House of Representatives, Committee on Education and the Workforce)
Despite Labor Shortage, Few Employers Tapping Into Pool of Experienced Older Workers
Excerpt: "In the next 25 years, the American economy will be dealt a blow so devastating it could slash productivity and put a stop to growth. It's not an attack from outside, but the aging of our own workforce. And few employers have given any thought to how they are going to deal with the crisis ..." (Chicago Tribune)
Opinion: Enron Questions and Answers; Was Lay Duped?
Excerpt: "His 2001 option exercises also seemed to show that he was serenely unaware of the abyss in which his company was hurtling." (Graef Crystal, on Bloomberg.com)
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Copyright 2002 BenefitsLink.com, Inc., but you may freely distribute this email newsletter in whole. This newsletter is edited by David Rhett Baker, J.D.